Terrorists attacked the police headquarters in Chabahar, located in the southeastern province of Sistan and Baluchestan, with an explosives-laden vehicle on Thursday morning, local officials said.
The terrorists, however, failed to reach their target as security forces quickly responded to the situation, said Governor of Sistan and Baluchestan Province, Ahmad-Ali Mouhebati.
Some sources said sporadic shooting followed the blast, Press TV reported.
There are conflicting reports about the number of casualties.
Mouhebati said two people have lost their lives. A number of civilians have also been wounded in the terror blast.
Mohammad Hadi Marashi, deputy governor for security affairs, told state TV that the two victims were police officers.
Officials said the situation in the city is back to normal, while operational forces are monitoring the situation.
No Group has claimed responsibility for the attack.